<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) February 2, 1996
-------------------------------
Southwest Banks, Inc.
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(Exact name of registrant as specified in its charter)
Florida 0-18505 65-0083473
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
900 Goodlette Road, Naples, Florida 33940
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (941)435-7600
-----------------------------
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On February 2, 1996, Southwest Banks, Inc. (the "Company") signed a
definitive Agreement and Plan of Merger which provides for the acquisition of
the Company by F.N.B. Corporation, a Pennsylvania corporation ("FNB") through
the merger of a wholly-owned subsidiary of FNB with and into the Company. The
Board of Directors of both FNB and the Company approved the Merger Agreement
and the transactions contemplated thereby at their respective meetings held on
February 2, 1996. Under the terms of the Merger Agreement, at the effective
time of the merger, each outstanding share of the Company's Common Stock will
be converted into the right to receive 0.78 of a share (the "Exchange Ratio")
of FNB common stock.
The Merger is intended to constitute a tax-free reorganization under
the Internal Revenue Code of 1986, as amended, and to be accounted for as a
pooling of interests.
The Merger Agreement contemplates that each stock option, warrant or
other right to purchase shares of the Company's Common Stock under the
Company's stock option and other stock plans or agreements (each a "Plan"),
will be converted into and become a right to purchase shares of FNB Common
Stock in accordance with the terms of the Plan and the option, warrant or other
right agreement by which it is evidenced, except that from and after the
Effective Time (i) the number of shares of FNB Common Stock subject to each
Company option, warrant or right shall be equal to the number of shares of the
Company's Common Stock subject to such option, warrant or right immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (ii) the per
share exercise price of FNB Common Stock purchasable thereunder or upon which
the amount of a cash payment is determined shall be that specified in the
option, warrant or right divided by the Exchange Ratio.
Each holder of the Company's Common Stock or of an option, warrant or
right to purchase the Company's Common Stock who would otherwise be entitled to
receive a fractional share of FNB Common Stock (after taking into account all
of a shareholder's certificates) will receive, in lieu thereof, the equivalent
cash value of such fractional share, without interest.
Consummation of the Merger is subject to various conditions,
including: (i) receipt of approval by the shareholders of the Company of the
Merger Agreement and the Merger, as required to be approved under Florida law;
(ii) receipt of certain regulatory approvals from the Board of Governors of the
Federal Reserve System and the Department of Banking and Finance of the State
of Florida; (iii) receipt of opinion of counsel as to the tax-free nature of
certain aspects of the Merger; (iv) receipt of a letter from Ernst & Young,
LLP, FNB's independent public accountants relating to the pooling of interests
accounting treatment of the Merger; (v) the Company's cumulative earnings
(subject to certain adjustments) since December 31, 1995 through the close of
the most recent calendar quarter must be greater than or equal to the amount
equal to $500,000 multiplied by the number of calendar quarters which have
passed since December 31, 1995; and (vi) satisfaction of certain other
conditions. If the price of FNB Common Stock falls below $19 at any time
during the ten day period commencing two days after the Board of Governors of
the Federal Reserve System approves the merger, the Company may, under certain
circumstances, give notice of termination of the Agreement, unless FNB
determines, in its discretion, to increase the Exchange
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Ratio pursuant to an adjustment formula specified in the Merger Agreement and
the Company permits such a revision of the Exchange Ratio.
The Merger Agreement and the Merger will be submitted for approval at
a meeting of the shareholders of the Company. Prior to such meeting, FNB will
file a registration statement with the Securities and Exchange Commission
registering under the Securities Act of 1933, as amended, the FNB Common Stock
to be issued in exchange for the outstanding shares of the Company's Common
Stock in the Merger.
The preceding description of the Merger Agreement is qualified in its
entirety by reference to the copy of the Merger Agreement included as an
Exhibit to this Current Report on Form 8-K dated February 2, 1996 and filed on
February 9, 1996 (the "Current Report") and which is incorporated by reference.
Immediately after executing the Merger Agreement, the Company and FNB
entered into a Stock Option Agreement, dated February 2, 1996 (the "Stock
Option Agreement"), pursuant to which the Company granted to FNB an option to
purchase, under certain circumstances and subject to certain adjustments, up to
727,163 shares of the Company's Common Stock at a price, subject to certain
adjustments, of $15 per share (the "FNB Option"). The FNB Option, if
exercised, would equal, before giving effect to the exercise of the FNB Option,
19.9% of the total number of shares of the Company's Common Stock outstanding
as of its date of exercise. The FNB Option was granted by the Company as a
condition and inducement to FNB's willingness to enter into the Merger
Agreement. Under certain circumstances, the Company may be required to
repurchase the FNB Option or the shares acquired pursuant to the exercise of
the FNB Option.
The preceding description of the Stock Option Agreement is qualified
in its entirety by reference to the copy of the Stock Option Agreement included
as an Exhibit to this Current Report and which is incorporated by reference.
The Merger is expected to be consummated in December 1996 or January
1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
*2.1 Agreement and Plan of Merger, dated as of February 2, 1996, by
and among F.N.B. Corporation, Lambda Corporation and
Southwest Banks, Inc.
4.1 Stock Option Agreement, dated February 2, 1996 between
Southwest Banks, Inc., as issuer and F.N.B. Corporation, as
grantee.
- ----------------
* Certain Schedules related to the Agreement and Plan of Merger are omitted
from this filing. Southwest Banks, Inc. agrees to supplementally furnish to
the Commission upon request a copy of any omitted schedule. The omitted
schedules relate to the following sections of the Agreement and
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Plan of Merger: Section 3.5 - Conversion of Stock Options; Section 5.2 -
Authority; No Breach by Agreement; Section 5.4 - SWB Subsidiaries; Section 5.6
- - Absence of Certain Changes or Events; Section 5.7 - Tax Matters; Section 5.8
- - Assets; Section 5.9 - Environmental Matters; Section 5.12 - Employee Benefit
Plans; Section 5.13 - Material Contracts; Section 5.14 - Legal Proceedings;
Section 5.20 - Derivative Contracts; Section 7.2 - Negative Covenants of SWB;
Section 8.12 - Agreement of Affiliates; Section 8.13 - Employee Benefits and
Contracts; and Section 9.1 - Consents and Approvals.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOUTHWEST BANKS, INC.
Dated: February 7, 1996 By:/s/ Gary L. Tice
--------------------------------------
Gary L. Tice, Chairman of the Board,
President and Chief Executive
Officer
Dated: February 7, 1996 By:/s/ Lewis S. Albert
--------------------------------------
Lewis S. Albert
Chief Financial Officer
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Exhibit Page No.
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<S> <C>
2.1 Agreement and Plan of Merger, dated as of February 2, 1996, by and
among F.N.B. Corporation, Lambda Corporation and Southwest Banks,
Inc.
4.1 Stock Option Agreement, dated February 2, 1996 between Southwest
Banks, Inc., as issuer and F.N.B. Corporation, as grantee.
</TABLE>
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EXHIBIT NUMBER 2.1
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
F.N.B. CORPORATION,
LAMBDA CORPORATION
AND
SOUTHWEST BANKS, INC.
Dated as of February 2, 1996
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 2
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Execution of Stock Option Agreement . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 - TERMS OF MERGER . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Bylaws . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 FNB Board of Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3 - MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 3
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Shares Held by Southwest or FNB . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Fractional Shares . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Conversion of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 4 - EXCHANGE OF SHARES . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Rights of Former Southwest Shareholders . . . . . . . . .. . . . . . . . . . . . . . . . . . 7
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF SOUTHWEST . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Organization, Standing, and Power . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 8
5.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Capital Stock . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 9
5.4 Southwest Subsidiaries . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 10
5.5 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Tax Matters . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 12
5.8 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9 Environmental Matters . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 14
5.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.11 Labor Relations . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 16
5.12 Employee Benefit Plans . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 16
5.13 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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5.14 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.15 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.16 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.17 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.18 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.19 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.20 Derivatives Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF FNB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.6 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.13 Derivatives Contracts . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1 Affirmative Covenants of Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.2 Negative Covenants of Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Covenants of FNB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 8 - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 Registration Statement; Proxy Statement;
Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . 34
8.4 Filings with State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.9 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.10 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.11 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.12 Agreement of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.13 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.2 Conditions to Obligations of FNB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.3 Conditions to Obligations of Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 10 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 11 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.12 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.13 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
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<S> <C>
1. Form of Stock Option Agreement. (Section 1.4).
2. Form of agreement of affiliates of Southwest. (Section 8.12).
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of February 2, 1996, by and among F.N.B. CORPORATION
("FNB"), a Pennsylvania corporation having its principal office located in
Hermitage, Pennsylvania; LAMBDA CORPORATION, a newly incorporated Florida
corporation and a wholly-owned subsidiary of FNB ("Merger Sub"); and SOUTHWEST
BANKS, INC. ("Southwest"), a Florida corporation having its principal office
located in Naples, Florida.
PREAMBLE
The Boards of Directors of Southwest and FNB are of the
opinion that the strategic affiliation described herein is in the best
interests of the parties and their respective shareholders. This Agreement
provides for the acquisition of Southwest by FNB pursuant to the merger of
Merger Sub with and into Southwest. At the effective time of such merger, the
outstanding shares of the capital stock of Southwest shall be converted into
the right to receive shares of the common stock of FNB (except as provided
herein). As a result, shareholders of Southwest shall become shareholders of
FNB. Further, it is the current intention of FNB, subsequent to the effective
time of this strategic affiliation, to retain the management team of Southwest
with the authority and responsibility for operating Southwest and its
subsidiaries in substantially same manner and fashion as historically operated
by such management team. The transactions described in this Agreement are
subject to the approvals of the shareholders of Southwest, the Board of
Governors of the Federal Reserve System, the Florida Department of Banking and
Finance, and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that the
Merger (as hereinafter defined) for federal income tax purposes shall qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code, and for accounting purposes shall qualify for treatment as a
pooling of interests.
Immediately after the execution and delivery of this
Agreement, as a condition and inducement to FNB's willingness to enter into
this Agreement, Southwest and FNB are entering into a stock option agreement
(the "Stock Option Agreement"), in substantially the form of Exhibit 1,
pursuant to which Southwest is granting to FNB an option to purchase shares of
Southwest Common Stock.
<PAGE> 8
Certain terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, Merger Sub shall be merged with and into
Southwest in accordance with the provisions of the FBCA (the "Merger").
Southwest shall be the Surviving Corporation resulting from the Merger and
shall continue to be governed by the Laws of the State of Florida. The Merger
shall be consummated pursuant to the terms of this Agreement, which has been
approved and adopted by the respective Boards of Directors of Southwest, Merger
Sub and FNB.
1.2 TIME AND PLACE OF CLOSING. The closing will take place
at 9:00 A.M. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M.), or at such
other time as the Parties, acting through their chief executive officers or
chief financial officers, may mutually agree. The place of closing shall be at
such location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Florida Certificate of Merger reflecting the Merger shall become
effective with the Secretary of State of the State of Florida (the "Effective
Time"). Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon in writing by each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on or before the fifth business
day (as designated by FNB) following the last to occur of (i) the effective
date (including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (ii) the date on which the shareholders
of Southwest approve this Agreement to the extent such approval is required by
applicable Law; provided, however, that in no event shall the Effective Time
occur prior to January 1, 1997, unless FNB determines in its sole discretion to
permit the Effective Time to occur prior to January 1, 1997, but not earlier
than December 16, 1996.
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1.4 EXECUTION OF STOCK OPTION AGREEMENT. Immediately after
the execution of this Agreement and as a condition thereto, Southwest is
executing and delivering to FNB the Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of Southwest in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Southwest in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.
2.3 FNB BOARD OF DIRECTORS. Following the Effective Time,
the number of members of the FNB Board of Directors shall be increased by
three, and three of the then current directors of Southwest shall be nominated
by the FNB Board of Directors and elected to such Board.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of FNB, Merger Sub or Southwest, or the shareholders of any
of the foregoing, the shares of the constituent corporations shall be converted
as follows:
(a) Each share of FNB Capital Stock issued and
outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
(b) Each share of common stock of the Merger Sub
issued and outstanding immediately prior to the Effective Time shall
become and be converted into one share of Southwest Common Stock and
shall remain issued and outstanding.
(c) Each share of Southwest Common Stock (excluding
shares held by any Southwest Company or any FNB Company, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted) issued and
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outstanding at the Effective Time shall cease to be outstanding and
shall be converted into and exchanged for 0.78 shares of FNB Common
Stock (subject to possible adjustment pursuant to Section 10.1(g) of
this Agreement, the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event FNB changes the
number of shares of FNB Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend or similar
recapitalization with respect to such stock and the record date therefor (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
3.3 SHARES HELD BY SOUTHWEST OR FNB. Each of the shares of
Southwest Common Stock held by any Southwest Company or by any FNB Company, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision
of this Agreement, each holder of shares of Southwest Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of FNB Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of FNB
Common Stock multiplied by the market value of one share of FNB Common Stock at
the Effective Time. The market value of one share of FNB Common Stock at the
Effective Time shall be the average of the high bid and low asked prices of
such common stock in the over-the-counter market, as reported by Nasdaq (or, if
not reported thereby, any other authoritative source selected by FNB) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.
3.5 CONVERSION OF STOCK OPTIONS.
(a) At the Effective Time, each option, warrant or
other right to purchase shares of Southwest Common Stock pursuant to
outstanding stock options, warrant agreements or stock appreciation rights
("Southwest Options") granted by Southwest under the Southwest Stock Plans
identified in Section 3.5 of the Southwest Disclosure Memorandum, which are
outstanding at the Effective Time, whether or not exercisable, shall be
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converted into and become rights with respect to FNB Common Stock, and FNB
shall assume each Southwest Option, in accordance with the terms of the
Southwest Stock Plan, stock option agreement or warrant agreement by which it
is evidenced, except that from and after the Effective Time, (i) FNB and its
Compensation Committee shall be substituted for Southwest and the Compensation
Committee of Southwest's Board of Directors (including, if applicable, the
entire Board of Directors of Southwest) administering such Southwest Stock
Plan, (ii) each Southwest Option assumed by FNB may be exercised solely for
shares of FNB Common Stock (or cash in the case of stock appreciation rights),
(iii) the number of shares of FNB Common Stock subject to such Southwest Option
shall be equal to the number of shares of Southwest Common Stock subject to
such Southwest Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and (iv) the per share exercise price under each such Southwest
Option shall be adjusted by dividing the per share exercise price under each
such Southwest Option by the Exchange Ratio and rounding down to the nearest
cent. Notwithstanding the provisions of clause (iii) of the preceding
sentence, FNB shall not be obligated to issue any fraction of a share of FNB
Common Stock upon exercise of Southwest Options and any fraction of a share of
FNB Common Stock that otherwise would be subject to a converted Southwest
Option shall represent the right to receive a cash payment equal to the product
of such fraction and the difference between the market value of one share of
FNB Common Stock and the per share exercise price of such Option. In addition,
notwithstanding the provisions of clauses (iii) and (iv) of the first sentence
of this Section 3.5, each Southwest Option which is an "incentive stock option"
shall be adjusted as required by Section 424 of the Internal Revenue Code, and
the regulations promulgated thereunder, so as not to constitute a modification,
extension, or renewal of the option within the meaning of Section 424(h) of the
Internal Revenue Code. Southwest agrees to take all necessary steps to
effectuate the foregoing provisions of this Section 3.5.
(b) As soon as practicable after the Effective
Time, FNB shall deliver to the participants in each Southwest Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants pursuant to such Southwest Stock Plan shall continue in effect on
the same terms and conditions (subject to the adjustments required by Section
3.5(a) after giving effect to the Merger), and FNB shall comply with the terms
of each Southwest Stock Plan to ensure, to the extent required by, and subject
to the provisions of, such Southwest Stock Plan, that Southwest Options which
qualified as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options after the Effective Time.
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At or prior to the Effective Time, FNB shall take all corporate action
necessary to reserve for issuance sufficient shares of FNB Common Stock for
delivery upon exercise of Southwest Options assumed by it in accordance with
this Section 3.5. As soon as practicable after the Effective Time, FNB shall
file a registration statement on Form S-3 or Form S-8, as the case may be (or
any successor or other appropriate forms), with respect to the shares of FNB
Common Stock subject to such options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the 1934 Act, where applicable, FNB shall administer the
Southwest Stock Plan assumed pursuant to this Section 3.5 in a manner that
complies with Rule 16b-3 promulgated under the 1934 Act to the extent the
Southwest Stock Plan complied with such rule prior to the Merger.
(c) All restrictions or limitations on transfer
with respect to Southwest Common Stock awarded under the Southwest Stock Plans
or any other plan, program, or arrangement of any Southwest Company, to the
extent that such restrictions or limitations shall not have already lapsed, and
except as otherwise expressly provided in such plan, program, or arrangement,
shall remain in full force and effect with respect to shares of FNB Common
Stock into which such restricted stock is converted pursuant to Section 3.1 of
this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time,
FNB and Southwest shall cause the exchange agent selected by FNB (the "Exchange
Agent") to mail to the former shareholders of Southwest appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing shares of Southwest
Common Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent). After the Effective Time, each holder of shares of Southwest
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall upon surrender thereof promptly receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such
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shares (without interest thereon) pursuant to Section 4.2 of this Agreement.
To the extent required by Section 3.4 of this Agreement, each holder of shares
of Southwest Common Stock issued and outstanding at the Effective Time also
shall receive, upon surrender of the certificate or certificates representing
such shares, cash in lieu of any fractional share of FNB Common Stock to which
such holder may be otherwise entitled (without interest). FNB shall not be
obligated to deliver the consideration to which any former holder of Southwest
Common Stock is entitled as a result of the Merger until such holder surrenders
such holder's certificate or certificates representing the shares of Southwest
Common Stock for exchange as provided in this Section 4.1. The certificate or
certificates of Southwest Common Stock so surrendered shall be duly endorsed as
the Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither FNB nor the Exchange Agent shall be liable to a holder
of Southwest Common Stock for any amounts paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER SOUTHWEST SHAREHOLDERS. At the
Effective Time, the stock transfer books of Southwest shall be closed as to
holders of Southwest Common Stock immediately prior to the Effective Time and
no transfer of Southwest Common Stock by any such holder shall thereafter be
made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 4.1 of this Agreement, each certificate theretofore
representing shares of Southwest Common Stock (other than shares to be canceled
pursuant to Section 3.3 of this Agreement) shall from and after the Effective
Time represent for all purposes only the right to receive the consideration
provided in Sections 3.1 and 3.4 of this Agreement in exchange therefor,
subject, however, to FNB's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which have been
declared or made by Southwest in respect of such shares of Southwest Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. Whenever a dividend or other distribution is declared by
FNB on the FNB Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, but beginning 30 days after
the Effective Time no dividend or other distribution payable to the holders of
record of FNB Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any certificate representing shares of
Southwest Common Stock issued and outstanding at the Effective Time until such
holder surrenders such certificate for exchange as provided in Section 4.1 of
this Agreement. However, upon surrender of such Southwest Common Stock
certificate, both the
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FNB Common Stock certificate (together with all such undelivered dividends or
other distributions without interest) and any undelivered dividends and cash
payments to be paid for fractional share interests (without interest) shall be
delivered and paid with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SOUTHWEST
Southwest hereby represents and warrants to FNB as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Southwest is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Florida, and has the corporate power and authority to
carry on its business as now conducted and to own, lease, and operate its
material Assets. Southwest is duly qualified or licensed to transact business
as a foreign corporation in good standing in the States of the United States
and foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southwest.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Southwest has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Southwest, subject to the approval of this Agreement by the holders of
a majority of the outstanding shares of Southwest Common Stock other than those
shares beneficially owned by FNB, which is the only shareholder vote required
for approval of this Agreement and consummation of the Merger by Southwest.
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of Southwest, enforceable against
Southwest in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or
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<PAGE> 15
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought). The Southwest Board of Directors has received from
The Robinson-Humphrey Company, Inc. a letter dated as of the date of this
Agreement to the effect that, in the opinion of such firm, the Exchange Ratio
is fair, from a financial point of view, to the holders of Southwest Common
Stock.
(b) Neither the execution and delivery of this
Agreement by Southwest, nor the consummation by Southwest of the transactions
contemplated hereby, nor compliance by Southwest with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of
Southwest's Articles of Incorporation or Bylaws, or, (ii) except as disclosed
in Section 5.2(b)(ii) of the Southwest Disclosure Memorandum, constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Southwest Company under, any Contract
or Permit of any Southwest Company, where such Default or Lien, or any failure
to obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Southwest, or, (iii) subject to receipt
of the requisite Consents referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any Southwest Company or any of their
respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Southwest,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by Southwest of the Merger and the other
transactions contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Southwest
consists of (i) 25,000,000 shares of Southwest Common Stock, of which 3,654,089
shares are issued and outstanding as of the date of this Agreement and not more
than 4,000,855 shares will be issued and outstanding at the Effective Time, and
(ii) 100,000 shares of preferred stock, par value $0.10 per share, none of
which is issued and outstanding. All of the issued and outstanding shares of
capital stock of Southwest are duly and
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validly issued and outstanding and are fully paid and nonassessable under the
FBCA. None of the outstanding shares of capital stock of Southwest has been
issued in violation of any preemptive rights of the current or past
shareholders of Southwest. Southwest has reserved 651,194 shares of Southwest
Common Stock for issuance under the Southwest Stock Plans, pursuant to which
options and warrants to purchase not more than 452,930 shares of Southwest
Common Stock are outstanding.
(b) Except as set forth in Section 5.3(a) of this
Agreement, or as provided pursuant to the Stock Option Agreement, there are no
shares of capital stock or other equity securities of Southwest outstanding and
no outstanding Rights relating to the capital stock of Southwest.
5.4 SOUTHWEST SUBSIDIARIES. Southwest has disclosed in
Section 5.4 of the Southwest Disclosure Memorandum all of the Southwest
Subsidiaries as of the date of this Agreement. Except as disclosed in Section
5.4 of the Southwest Disclosure Memorandum, Southwest or one of its
Subsidiaries owns all of the issued and outstanding shares of capital stock of
each Southwest Subsidiary. No equity securities of any Southwest Subsidiary
are or may become required to be issued (other than to another Southwest
Company) by reason of any Rights, and there are no Contracts by which any
Southwest Subsidiary is bound to issue (other than to another Southwest
Company) additional shares of its capital stock or Rights or by which any
Southwest Company is or may be bound to transfer any shares of the capital
stock of any Southwest Subsidiary (other than to another Southwest Company).
There are no Contracts relating to the rights of any Southwest Company to vote
or to dispose of any shares of the capital stock of any Southwest Subsidiary.
All of the shares of capital stock of each Southwest Subsidiary held by a
Southwest Company are fully paid and nonassessable under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the Southwest Company free and clear of any Lien.
Each Southwest Subsidiary is either a bank or a corporation, and is duly
organized, validly existing, and (as to corporations) in good standing under
the Laws of the jurisdiction in which it is incorporated or organized, and has
the corporate power and authority necessary for it to own, lease, and operate
its Assets and to carry on its business as now conducted. Each Southwest
Subsidiary is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in
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the aggregate, a Material Adverse Effect on Southwest. Each Southwest
Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured by the Bank Insurance Fund.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Southwest has filed and made available to FNB
all forms, reports, and documents required to be filed by Southwest with the
SEC since December 31, 1992 (collectively, the "Southwest SEC Reports"). The
Southwest SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the 1933 Act and the 1934 Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Southwest SEC Reports or necessary
in order to make the statements in such Southwest SEC Reports, in light of the
circumstances under which they were made, not misleading. Except for Southwest
Subsidiaries that are registered as a broker, dealer or investment advisor,
none of Southwest's Subsidiaries is required to file any forms, reports, or
other documents with the SEC. Southwest has made available to FNB a copy of
the balance sheets and the related consolidated statements of income,
consolidated statement of changes in shareholders' equity (including related
notes and schedules) of its subsidiary banks as of and for the period ended
December 31, 1995 and any draft consolidated statements or earnings releases
for Southwest and its consolidated subsidiaries as of and for the period ended
December 31, 1995 that have been prepared by Southwest as of the date of this
Agreement.
(b) Each of the Southwest Financial Statements
(including, in each case, any related notes) contained in the Southwest SEC
Reports, including any Southwest SEC Reports filed after the date of this
Agreement until the Effective Time, complied as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements, or, in the case of unaudited statements, as
permitted by Form 10-QSB of the SEC), and fairly presented the consolidated
financial position of Southwest and its Subsidiaries as at the respective dates
and the consolidated results of its operations
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and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September
30, 1995, except as disclosed in Section 5.6 of the Southwest Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Southwest, and (ii) the Southwest Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Southwest provided in Article 7 of this Agreement.
5.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on
behalf of any of the Southwest Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1995, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, except to the
extent that all such failures to file, taken together, are not reasonably
likely to have a Material Adverse Effect on Southwest, and all Tax Returns
filed are complete and accurate in all material respects to the Knowledge of
Southwest. All Taxes shown on filed Tax Returns have been paid. There is no
audit examination, deficiency, or refund Litigation with respect to any Taxes
that is reasonably likely to result in a determination that would have,
individually or in the aggregate, a Material Adverse Effect on Southwest,
except as reserved against in the Southwest Financial Statements delivered
prior to the date of this Agreement or as disclosed in Section 5.7 of the
Southwest Disclosure Memorandum. All Taxes and other Liabilities due with
respect to completed and settled examinations or concluded Litigation have been
paid.
(b) Except as disclosed in Section 5.7 of the
Southwest Disclosure Memorandum, none of the Southwest Companies has executed
an extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect.
(c) Adequate provision for any Taxes due or to
become due for any of the Southwest Companies for the period or
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periods through and including the date of the respective Southwest Financial
Statements has been made and is reflected on such Southwest Financial
Statements, except as disclosed in Section 5.7 of the Southwest Disclosure
Memorandum.
(d) Deferred Taxes of the Southwest Companies have
been adequately provided for in the Southwest Financial Statements.
(e) Each of the Southwest Companies is in
compliance with, and its records contain all information and documents
(including properly completed Internal Revenue Service Forms W-9) necessary to
comply with, all applicable information reporting and Tax withholding
requirements under federal, state, and local Tax Laws, and such records
identify with specificity all accounts subject to backup withholding under
Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southwest.
(f) Except as disclosed in Section 5.7 of the
Southwest Disclosure Memorandum, none of the Southwest Companies has made any
payments, is obligated to make any payments, or is a party to any contract,
agreement, or other arrangement that could obligate it to make any payments
that would be disallowed as a deduction under Section 280G or 162(m) of the
Internal Revenue Code.
(g) There are no Liens with respect to Taxes upon
any of the assets of the Southwest Companies.
(h) There has not been an ownership change, as
defined in Internal Revenue Code Section 382(g), of the Southwest Companies
that occurred during or after any Taxable Period in which the Southwest
Companies incurred a net operating loss that carries over to any Taxable Period
ending after December 31, 1994.
(i) No Southwest Company has filed any consent
under Section 341(f) of the Internal Revenue Code concerning collapsible
corporation.
(j) All material elections with respect to Taxes
affecting the Southwest Companies as of the date of this Agreement have been or
will be timely made as set forth in Section 5.7 of the Southwest Disclosure
Memorandum. After the date hereof, other than as set forth in Section 5.7 of
the Southwest Disclosure Memorandum, no election with respect to
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Taxes will be made without the prior written consent of FNB, which consent will
not be unreasonably withheld.
(k) No Southwest Company has or has had a permanent
establishment in any foreign country, as defined in any applicable tax treaty
or convention between the United States and such foreign country.
5.8 ASSETS. Except as disclosed in Section 5.8 of the
Southwest Disclosure Memorandum, the Southwest Companies have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. All tangible properties used in the businesses of the Southwest
Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with Southwest's past
practices. All Assets which are material to Southwest's business on a
consolidated basis, held under leases or subleases by any of the Southwest
Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The Southwest Companies
currently maintain insurance in amounts, scope, and coverage as disclosed in
Section 5.8 of the Southwest Disclosure Memorandum. None of the Southwest
Companies has received written notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. Except as disclosed in Section 5.8 of the
Southwest Disclosure Memorandum, there are presently no claims pending under
such policies of insurance and no notices have been given by any Southwest
Company under such policies. The Assets of the Southwest Companies include all
Assets required to operate the business of the Southwest Companies as presently
conducted.
5.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Southwest, except as
disclosed in Section 5.9 of the Southwest Disclosure Memorandum, each Southwest
Company, its Participation Facilities, and its Loan Properties are, and have
been, in compliance with all Environmental Laws, except for violations which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Southwest.
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(b) Except as disclosed in Section 5.9 of the
Southwest Disclosure Memorandum, to the Knowledge of Southwest, there is no
Litigation pending or threatened before any court, governmental agency, or
authority or other forum in which any Southwest Company or any of its Loan
Properties or Participation Facilities (or any Southwest Company in respect of
any such Loan Property or Participation Facility) has been or, with respect to
threatened Litigation, may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under, or involving any of
its Loan Properties or Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Southwest.
(c) To the Knowledge of Southwest, except as
disclosed in Section 5.9 of the Southwest Disclosure Memorandum, there is no
reasonable basis for any Litigation of a type described above in subsection
(b), except such as is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Southwest.
(d) To the Knowledge of Southwest, except as
disclosed in Section 5.9 of the Southwest Disclosure Memorandum, there have
been no releases of Hazardous Material in, on, under, or affecting any
Participation Facility or Loan Property of a Southwest Company, except such as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Southwest.
5.10 COMPLIANCE WITH LAWS. Southwest is duly registered as a
bank holding company under the BHC Act. Each Southwest Company has in effect
all Permits necessary for it to own, lease, or operate its material Assets and
to carry on its business as now conducted, except for those Permits the absence
of which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Southwest, and there has occurred no Default under
any such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southwest. None
of the Southwest Companies:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business,
except for violations which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Southwest; and
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(b) has received any notification or communication
from any agency or department of federal, state, or local government
or any Regulatory Authority or the staff thereof (i) asserting that
any Southwest Company is not in compliance with any of the Laws or
Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Southwest, (ii) threatening to revoke any Permits, the revocation of
which is reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Southwest, or (iii) requiring any
Southwest Company to enter into or consent to the issuance of a cease
and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or
similar undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit
or reserve policies, its management, or the payment of dividends.
5.11 LABOR RELATIONS. No Southwest Company is the subject of
any Litigation asserting that it or any other Southwest Company has committed
an unfair labor practice (within the meaning of the National Labor Relations
Act or comparable state law) or seeking to compel it or any other Southwest
Company to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving any
Southwest Company, pending or threatened, or to the Knowledge of Southwest, is
there any activity involving any Southwest Company's employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
5.12 EMPLOYEE BENEFIT PLANS.
(a) Southwest has disclosed in Section 5.12 of the
Southwest Disclosure Memorandum, and has delivered or made available to FNB
prior to the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" (as
that term is defined in Section 3(3) of ERISA), currently adopted, maintained
by, sponsored in whole or in part by, or contributed to by any Southwest
Company or ERISA Affiliate (as defined below) thereof for the benefit of
employees, retirees, dependents,
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spouses, directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Southwest Benefit Plans"). Any of the Southwest Benefit Plans which is an
"employee pension benefit plan" (as that term is defined in Section 3(2) of
ERISA), is referred to herein as a "Southwest ERISA Plan." Each Southwest
ERISA Plan which is also a "defined benefit plan" (as defined in Section 4140)
of the Internal Revenue Code) is referred to herein as a "Southwest Pension
Plan." No Southwest Pension Plan is or has been a multiemployer plan within
the meaning of Section 3(37) of ERISA.
(b) Except as disclosed in Section 5.12 of the
Southwest Disclosure Memorandum, all Southwest Benefit Plans are in compliance
with the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southwest, and
each Southwest ERISA Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code has received a favorable determination
letter from the Internal Revenue Service, and Southwest is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. Except as disclosed in Section 5.12 of the Southwest
Disclosure Memorandum, to the Knowledge of Southwest, no Southwest Company has
engaged in a transaction with respect to any Southwest Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any Southwest Company to a Tax imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA in amounts which are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southwest.
(c) Except as disclosed in Section 5.12 of the
Southwest Disclosure Memorandum, no Southwest Pension Plan has any "unfunded
current liability" (as that term is defined in Section 302(d)(8)(A) of ERISA)
and the fair market value of the assets of any such plan exceeds the plan's
"benefit liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements. Except as disclosed in
Section 5.12 of the Southwest Disclosure Memorandum, since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any Southwest Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Southwest Pension Plan, and (iii) no
increase in benefits under any Southwest Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
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Southwest or materially adversely affect the funding status of any such plan.
Neither any Southwest Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any Southwest Company, or the single-employer plan of any entity which is
considered one employer with Southwest under Section 4001 of ERISA or Section
414 of the Internal Revenue Code or Section 302 of ERISA (whether or not
waived) (an "ERISA Affiliate") has an "accumulated funding deficiency" within
the meaning of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, which is reasonably likely to have a Material Adverse Effect on
Southwest. No Southwest Company has provided, or is required to provide,
security to a Southwest Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the
Effective Time, no Liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any Southwest Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate, which Liability is reasonably likely to have a Material
Adverse Effect on Southwest. No Southwest Company has incurred any withdrawal
Liability with respect to a multiemployer plan under Subtitle B of Title IV of
ERISA (regardless of whether based on contributions of an ERISA Affiliate),
which Liability is reasonably likely to have a Material Adverse Effect on
Southwest. No notice of a "reportable event," within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any Southwest Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof
(e) Except as disclosed in Section 5.12 of the
Southwest Disclosure Memorandum, no Southwest Company has any Liability for
retiree health and life benefits under any of the Southwest Benefit Plans and
there are no restrictions on the rights of such Southwest Company to amend or
terminate any such plan without incurring any Liability thereunder, which
Liability is reasonably likely to have a Material Adverse Effect on Southwest.
(f) Except as disclosed in Section 5.12 of the
Southwest Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including severance, unemployment compensation, golden
parachute, or otherwise) becoming due to any director or any employee of any
Southwest Company from any Southwest Company under any Southwest Benefit Plan
or otherwise, (ii) increase any benefits
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<PAGE> 25
otherwise payable under any Southwest Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, where such
payment, increase, or acceleration is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Southwest.
(g) The actuarial present values of all accrued
deferred compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any Southwest Company and their respective
beneficiaries, other than entitlements accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, have been fully reflected on the Southwest Financial
Statements to the extent required by and in accordance with GAAP.
5.13 MATERIAL CONTRACTS. Except as disclosed in Section 5.13
of the Southwest Disclosure Memorandum, none of the Southwest Companies, nor
any of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment,
severance, termination, consulting, or retirement Contract providing for
aggregate payments to any Person in any calendar year in excess of $100,000,
(ii) any Contract relating to the borrowing of money by any Southwest Company
or the guarantee by any Southwest Company of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, and Federal Home Loan Bank advances of
depository institution Subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), and (iii)
any other Contract or amendment thereto that would be required to be filed as
an exhibit to a Form 10-KSB filed by Southwest with the SEC as of the date of
this Agreement that has not been filed as an exhibit to Southwest's Form 10-KSB
filed for the fiscal year ended December 31, 1994, or in another SEC Document
and identified to FNB (together with all Contracts referred to in Sections 5.8
and 5.12(a) of this Agreement, the "Southwest Contracts"). With respect to
each Southwest Contract and except as disclosed in Section 5.13 of the
Southwest Disclosure Memorandum: (i) the Contract is in full force and effect;
(ii) no Southwest Company is in Default thereunder, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Southwest; (iii) no Southwest Company has repudiated or
waived any material provision of any such Contract; and (iv) no other party to
any such Contract is, to the Knowledge of Southwest, in Default in any respect,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material
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<PAGE> 26
Adverse Effect on Southwest, or has repudiated or waived any material
provision any material provision thereunder. Except for Federal Home
Loan Bank thereunder. Except for Federal Home Loan Bank advances, all of the
indebtedness of any Southwest Company for money borrowed is prepayable at any
time by such Southwest Company without penalty or premium.
5.14 LEGAL PROCEEDINGS. Except as disclosed in Section 5.14
of the Southwest Disclosure Memorandum, there is no Litigation instituted or
pending, or, to the Knowledge of Southwest, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Southwest
Company, or against any Asset, employee benefit plan, interest, or right of any
of them, that is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Southwest, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any Southwest Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southwest.
Section 5.14 of the Southwest Disclosure Memorandum includes a summary report
of all Litigation as of the date of this Agreement to which any Southwest
Company is a party and which names a Southwest Company as a defendant or
cross-defendant and where the estimated maximum exposure to be $100,000 or
more.
5.15 REPORTS. Since January 1, 1992, or the date of
organization if later, each Southwest Company has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities (except,
in the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southwest). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its
respective date, each such report and document did not, in all material
respects, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
5.16 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any Southwest Company or any Affiliate thereof
for inclusion in the Registration Statement to be filed by FNB with the SEC
will, when the Registration Statement becomes effective, be false or misleading
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with respect to any material fact, or omit to state any material fact necessary
to make the statements therein not misleading. None of the information
supplied or to be supplied by any Southwest Company or any Affiliate thereof
for inclusion in the Proxy Statement to be mailed to Southwest's shareholders
in connection with the Shareholders' Meeting, and any other documents to be
filed by a Southwest Company or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of Southwest, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Southwest Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.17 ACCOUNTING, TAX AND REGULATORY MATTERS. No Southwest
Company or any Affiliate thereof has taken or agreed to take any action or has
any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of
a condition or restriction of the type referred to in the last sentence of such
Section.
5.18 STATE TAKEOVER LAWS. Each Southwest Company has taken
all necessary action to exempt the transactions contemplated by this Agreement
from any applicable "moratorium," "control share," "fair price," "business
combination," or other anti-takeover laws and regulations of the State of
Florida (collectively, "Takeover Laws").
5.19 CHARTER PROVISIONS. Each Southwest Company has taken
all action so that the entering into of this Agreement and the consummation of
the Merger and the other transactions contemplated by this Agreement do not and
will not result in
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any super-majority voting requirement or the grant of any rights to any Person
under the Articles of Incorporation, Bylaws, or other governing instruments of
any Southwest Company or restrict or impair the ability of FNB or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, shares of any Southwest Company that may be directly or indirectly
acquired or controlled by it.
5.20 DERIVATIVES CONTRACTS. Except as disclosed in Section
5.20 of the Southwest Disclosure Memorandum, neither Southwest nor any of its
Subsidiaries is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor, or collar financial
contract, or any other interest rate or foreign currency protection contract
not included on its balance sheet which is a financial derivative contract
(including various combinations thereof) (each a "Derivatives Contract"),
except for those Derivatives Contracts set forth in Section 5.20 of the
Southwest Disclosure Memorandum.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FNB
FNB hereby represents and warrants to Southwest as follows:
6.1 ORGANIZATION, STANDING, AND POWER. FNB is a corporation
duly organized, validly existing, and in good standing under the Laws of the
Commonwealth of Pennsylvania, and has the corporate power and authority to
carry on its business as now conducted and to own, lease, and operate its
material Assets. FNB is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) FNB has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect
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thereof on the part of FNB. This Agreement represents a legal, valid, and
binding obligation of FNB, enforceable against FNB in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this
Agreement by FNB, nor the consummation by FNB of the transactions contemplated
hereby, nor compliance by FNB with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of FNB's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any FNB Company under, any Contract or Permit of any FNB Company,
where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB, or, (iii) subject to receipt of the requisite Consents referred
to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any FNB Company or any of their respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the Nasdaq, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by FNB of the Merger and the other transactions
contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of FNB
consists of 20,000,000 shares of FNB Common Stock, of which 8,611,814 shares
were issued and outstanding as of December 31, 1995 and (ii) 20,000,000 shares
of FNB Preferred Stock, of which 451,638 shares were issued and outstanding as
of December 31, 1995. All of the issued and outstanding shares of FNB Capital
Stock are, and all of the shares of FNB Common Stock to be issued in exchange
for shares of Southwest Common Stock upon consummation of the Merger, when
issued in accordance with the terms of this Agreement, will be, duly and
validly issued and
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outstanding and fully paid and nonassessable under the PBCL. None of the
outstanding shares of FNB Capital Stock has been, and none of the shares of FNB
Common Stock to be issued in exchange for shares of Southwest Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of FNB.
6.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) FNB has filed and made available to Southwest
all forms, reports, and documents required to be filed by FNB with the SEC
since December 31, 1992, other than registration statements on Forms S-4 and
S-8 (collectively, the "FNB SEC Reports"). The FNB SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of
the 1933 Act and the 1934 Act, as the case may be, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such FNB SEC Reports or necessary in order to make the statements in such FNB
SEC Reports, in light of the circumstances under which they were made, not
misleading.
(b) Each of the FNB Financial Statements
(including, in each case, any related notes) contained in the FNB SEC Reports,
including any FNB SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC), and fairly presented the consolidated financial position of FNB
and its Subsidiaries as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount.
6.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September
30, 1995, except as disclosed in the FNB Financial Statements delivered prior
to the date of this Agreement, (i) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on FNB, and (ii) the FNB Companies
have not taken any action, or failed to take any action, prior to the date of
this Agreement, which action or
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failure, if taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and agreements of FNB
provided in Article 7 of this Agreement.
6.6 TAX MATTERS.
(a) All Tax Returns required to be filed by or on
behalf of any of the FNB Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1995, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, except to the
extent that all such failures to file, taken together, are not reasonably
likely to have a Material Adverse Effect on FNB, and all Tax Returns filed are
complete and accurate in all material respects. All Taxes shown on filed Tax
Returns have been paid. There is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on FNB, except as reserved against in the FNB Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) Adequate provision for any Taxes due or to
become due for any of the FNB Companies for the period or periods through and
including the date of the respective FNB Financial Statements has been made and
is reflected on such FNB Financial Statements.
(c) Deferred Taxes of the FNB Companies have been
adequately provided for in the FNB Financial Statements.
6.7 COMPLIANCE WITH LAWS. FNB is duly registered as a bank
holding company under the BHC Act. Each FNB Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB, and there has occurred no Default under any such Permit,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FNB. No FNB Company:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting
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<PAGE> 32
its business, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
FNB; and
(b) has received any notification or communication
from any agency or department of federal, state, or local government
or any Regulatory Authority or the staff thereof (i) asserting that
any FNB Company is not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on FNB, (ii) threatening
to revoke any Permits, the revocation of which is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
FNB, or (iii) requiring any FNB Company to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any board
resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management or the
payment of dividends.
6.8 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of FNB, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any FNB Company, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any FNB Company, that are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FNB.
6.9 REPORTS. Since January 1, 1992, or the date of
organization if later, each FNB Company has filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with Regulatory Authorities (except, in the case of state
securities authorities, failures to file which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB). As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit
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<PAGE> 33
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
6.10 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any FNB Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by FNB with the SEC, will,
when the Registration Statement becomes effective, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein not misleading. None of the information supplied
or to be supplied by any FNB Company or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to Southwest's shareholders in connection with
the Shareholders' Meeting, and any other documents to be filed by any FNB
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of Southwest, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any FNB Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all
material respects with the provisions of applicable Law.
6.11 ACCOUNTING, TAX AND REGULATORY MATTERS. No FNB Company
or any Affiliate thereof has taken or agreed to take any action or has any
Knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the transactions contemplated hereby, including the Merger, from qualifying as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
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6.12 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of FNB, except as disclosed in
Section 6.12 of the FNB Disclosure Memorandum, each FNB Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB.
(b) Except as disclosed in Section 6.12 of the FNB
Disclosure Memorandum, there is no Litigation pending, or, to the Knowledge of
FNB, threatened before any court, governmental agency, or authority or other
forum in which any FNB Company or any of its Loan Properties or Participation
Facilities (or any FNB Company in respect of any such Loan Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, or involving any of its Loan Properties or
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB.
(c) To the Knowledge of FNB, except as disclosed in
Section 6.12 of the FNB Disclosure Memorandum, there is no reasonable basis for
any Litigation of a type described above in subsection (b), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB.
(d) To the Knowledge of FNB, except as disclosed in
Section 6.12 of the FNB Disclosure Memorandum, there have been no releases of
Hazardous Material in, on, under, or affecting any Participation Facility or
Loan Property of a FNB Company, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB.
6.13 DERIVATIVES CONTRACTS. Neither FNB nor any of its
Subsidiaries is a party to or has agreed to enter into a Derivatives Contract,
except for those Derivatives Contracts set forth in Section 6.13 of the FNB
Disclosure Memorandum.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF SOUTHWEST. Unless the prior written
consent of FNB shall have been obtained, and except as otherwise expressly
contemplated herein, Southwest shall and shall cause each of its Subsidiaries
to (i) operate its business only in the usual, regular, and ordinary course,
(ii) preserve intact its business organization and Assets and maintain its
rights and franchises, (iii) use its reasonable efforts to maintain its
current employee relationships, and (iv) take no action which would (a)
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement, or (b) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF SOUTHWEST. From the date of this Agreement
until the earlier of the Effective Time or the termination of this
Agreement, Southwest covenants and agrees that it will not do or agree or
commit to do, or permit any of its Subsidiaries to do or agree or commit
to do, any of the following without the prior written consent of the chief
executive officer, president, chief financial officer, or any executive
vice president of FNB:
(a) amend the Articles of Incorporation, Bylaws, or other
governing instruments of any Southwest Company or, except as
expressly contemplated by this Agreement; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Southwest Company to
another Southwest Company) in excess of an aggregate of $100,000
(for the Southwest Companies on a consolidated basis) except in the
ordinary course of the business of Southwest Subsidiaries consistent
with past practices (which shall include, for Southwest
Subsidiaries that are depository institutions, creation of deposit
liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase
agreements fully secured by U.S. government or agency securities),
or impose, or suffer the imposition, on any Asset of any Southwest
Company of any Lien or permit any such Lien to exist (other than in
connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the
ordinary course of business, the
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satisfaction of legal requirements in the exercise of trust powers, and
Liens in effect as of the date hereof that are disclosed in the Southwest
Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible
into any shares, of the capital stock of any Southwest Company, or
declare or pay any dividend or make any other distribution in respect
of Southwest's capital stock; or
(d) except for this Agreement, or pursuant to the Stock Option
Agreement or pursuant to the exercise of stock options outstanding as
of the date hereof and pursuant to the terms thereof in existence on
the date hereof, or as disclosed in Section 7.2(d) of the Southwest
Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to
become outstanding, any additional shares of Southwest Common Stock
or any other capital stock of any Southwest Company, or any stock
appreciation rights, or any option, warrant, conversion, or other
right to acquire any such stock, or any security convertible into
any such stock; or
(e) adjust, split, combine, or reclassify any capital stock of
any Southwest Company or issue or authorize the issuance of any
other securities in respect of or in substitution for shares of
Southwest Common Stock, or sell, lease, mortgage, or otherwise
dispose of or otherwise encumber (x) any shares of capital stock of
any Southwest Subsidiary (unless any such shares of stock are sold
or otherwise transferred to another Southwest Company) or (y) any
Asset other than in the ordinary course of business for reasonable
and adequate consideration; or
(f) except for purchases of United States Treasury securities
or United States Government agency securities, which in either case
have maturities of five years or less, purchase any securities or
make any material investment, either by purchase of stock or
securities, contributions to capital, Asset transfers, or purchase
of any Assets, in any Person other than a wholly owned Southwest
Subsidiary, or otherwise acquire direct or indirect control over
any Person, other than in connection with (i)
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foreclosures in the ordinary course of business, (ii) acquisitions
of control by a depository institution Subsidiary in its fiduciary
capacity, or (iii) the creation of new wholly-owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Southwest Company, except in accordance
with past practice disclosed in Section 7.2(g) of the Southwest
Disclosure Memorandum or as required by Law; pay any severance or
termination pay or any bonus other than pursuant to written policies
or written Contracts in effect on the date of this Agreement or as
otherwise disclosed in Section 7.2(g) of the Southwest Disclosure
Memorandum; enter into or amend any severance agreements with
officers of any Southwest Company; grant any material increase in
fees or other increases in compensation or other benefits to
directors of any Southwest Company except in accordance with past
practice disclosed in Section 7.2(g) of the Southwest Disclosure
Memorandum; or voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits; or
(h) enter into or amend any employment Contract between any
Southwest Company and any Person (unless such amendment is required
by Law) that the Southwest Company does not have the unconditional
right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Effective
Time; or
(i) except as disclosed in Section 7.2(i) of the Southwest
Disclosure Memorandum, adopt any new employee benefit plan of any
Southwest Company or make any material change in or to any existing
employee benefit plans of any Southwest Company other than any such
change that is required by Law or that, in the opinion of counsel,
is necessary or advisable to maintain the tax qualified status of
any such plan; or
(j) make any significant change in any Tax or accounting methods
or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory
accounting requirements or GAAP; or
(k) except as disclosed in Section 7.2(k) of the Southwest
Disclosure Memorandum, commence any Litigation other than in
accordance with past practice or settle any Litigation involving any
Liability of any Southwest
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Company for material money damages or restrictions upon the operations
of any Southwest Company; or
(l) except in the ordinary course of business, modify, amend, or
terminate any material Contract or waive, release, compromise, or
assign any material rights or claims; or
(m) except for transactions in the ordinary course of business
consistent with past practice, make any investment in excess of
$100,000 either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of
any other individual, corporation or other entity other
than a wholly-owned Subsidiary thereof; or
(n) sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties or assets to any individual, corporation or
other entity other than a direct or indirect wholly owned
Subsidiary, or cancel, release or assign any indebtedness to any
such Person or any claims held by any such Person, except in the
ordinary course of business consistent with past practice or pursu-
ant to contracts or agreements in force at the date of this
Agreement; or
(o) agree to, or make any commitment to, take any of the actions
prohibited by this Section 7.2.
7.3 COVENANTS OF FNB. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, FNB
covenants and agrees that it shall (i) continue to conduct its business and
the business of its Subsidiaries in a manner designed in its reasonable
judgment, to enhance the long-term value of the FNB Common Stock and the
business prospects of the FNB Companies, and (ii) take no action which
would (a) materially adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the
last sentence of Section 9.1(b) of this Agreement, or (b) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement; provided, that the foregoing shall not
prevent any FNB Company from discontinuing or disposing of any of its
Assets or business if such action is, in the judgment of FNB, desirable in
the conduct of the business of FNB and its Subsidiaries. FNB further
covenants and agrees that it will not, without the prior written consent of
the Chairman and Chief Executive Officer of Southwest, which consent shall
not be unreasonably withheld, amend the Articles of
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Incorporation or Bylaws of FNB, in each case in any manner adverse to the
holders of Southwest Common Stock.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any
of its Subsidiaries which (i) is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on it or (ii) would cause or
constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent
or promptly to remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of
this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated financial
position of the entity filing such statements as of the dates indicated and
the consolidated results of operations, changes in shareholders' equity,
and cash flows for the periods then ended in accordance with GAAP (subject
in the case of interim financial statements to normal recurring year-end
adjustments that are not material). As of their respective dates, such
reports filed with the SEC will comply in all material respects with the
Securities Laws and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority
shall be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
As soon as practicable after execution of this Agreement, FNB shall file
the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the
1933 Act and take any action required to be taken under the applicable
state blue sky or securities Laws in connection with the issuance of the
shares of FNB Common Stock upon consummation of the Merger. Southwest
shall furnish all information concerning it and the holders of its capital
stock as FNB may reasonably request in
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connection with such action. Southwest shall call a Shareholders'
Meeting, to be held on a date that is determined by the Parties to be a
mutually desirable date, which date shall be after the Registration Statement
is declared effective by the SEC, for the purpose of voting upon approval of
this Agreement and such other related matters as it deems appropriate. In
connection with the Shareholders' Meeting, (i) Southwest shall prepare and
file with the SEC a Proxy Statement and mail such Proxy Statement to its
shareholders, (ii) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Proxy
Statement, (iii) the Board of Directors of Southwest shall recommend (subject
to compliance with their fiduciary duties as advised by counsel) to its
shareholders the approval of this Agreement, and (iv) the Board of Directors
and officers of Southwest shall (subject to compliance with their fiduciary
duties as advised by counsel) use their reasonable efforts to obtain such
shareholders' approval.
8.2 EXCHANGE LISTING. Southwest shall use its reasonable best
efforts to list, prior to the record date for determining shareholders
entitled to vote at the Shareholders' Meeting, for trading on the Nasdaq
as national market securities, the shares of Southwest Common Stock.
8.3 APPLICATIONS. FNB shall promptly prepare and file, and
Southwest shall cooperate in the preparation and, where appropriate, filing
of, applications with all Regulatory Authorities having jurisdiction over
the transactions contemplated by this Agreement seeking the requisite
Consents necessary to consummate the transactions contemplated by this
Agreement.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, FNB shall execute and file the Florida
Certificate of Merger with the Secretary of State of the State of Florida
in connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper,
or advisable under applicable Laws to consummate and make effective, as
soon as practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to consummate
the transactions contemplated herein and to cause to be satisfied the
conditions
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referred to in Article 9 of this Agreement; provided, that nothing
herein shall preclude either Party from exercising its rights under this
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it
and its Subsidiaries and of their respective financial and legal
conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. No
investigation by a Party shall affect the representations and warranties
of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreements, each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to
the Effective Time, each Party shall promptly return or certify the
destruction of all documents and copies thereof, and all work papers
containing confidential information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of
its investigation and which represents, or is reasonably likely to
represent, either a material breach of any representation, warranty,
covenant, or agreement of the other Party or which has had or is reasonably
likely to have a Material Adverse Effect on the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, Southwest and FNB
shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement
or any other transaction contemplated hereby; provided, that nothing in
this Section 8.7
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shall be deemed to prohibit any Party from making any disclosure which
its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Southwest Company nor any Affiliate
thereof nor any Representatives thereof retained by any Southwest Company
shall directly or indirectly solicit any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary
duties of Southwest's Board of Directors as advised by Smith, Gambrell &
Russell or other outside counsel reasonably acceptable to FNB, no
Southwest Company or any Affiliate or Representative thereof shall furnish
any non-public information that it is not legally obligated to furnish or
negotiate with respect to, any Acquisition Proposal, but Southwest may
communicate information about such an Acquisition Proposal to its
shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations as advised by counsel. Southwest shall
promptly notify FNB orally and in writing in the event that it receives
any inquiry or proposal relating to any such transaction. Southwest shall
(i) immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons conducted heretofore with
respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause of all its Representatives not to engage in any of the
foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take
no action which would cause the Merger not, to qualify for treatment as a
"reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code for federal income tax purposes. Southwest undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no
action that would cause the Merger not, to qualify for pooling-of-interests
accounting treatment.
8.10 STATE TAKEOVER LAWS. Each Southwest Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement
from, or if necessary challenge the validity or applicability of, any
applicable Takeover Laws.
8.11 CHARTER PROVISIONS. Each Southwest Company shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby
do not and will not result in any super-majority voting requirements or the
grant of any rights to any Person under the Articles of Incorporation,
Bylaws, or other governing instruments of any Southwest
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Company or restrict or impair the ability of FNB or any of its Subsidiaries
to vote, or otherwise to exercise the rights of a shareholder with respect
to, shares of any Southwest Company that may be directly or indirectly
acquired or controlled by it.
8.12 AGREEMENT OF AFFILIATES. Southwest has disclosed in Section
8.12 of the Southwest Disclosure Memorandum all Persons whom it reasonably
believes are "affiliates" of Southwest for purposes of Rule 145 under the
1933 Act. Southwest shall use its reasonable efforts to cause each such
Person to deliver to FNB not later than 30 days prior to the Effective
Time, a written agreement, substantially in the form of Exhibit 2,
providing that such Person will not sell, pledge, transfer, or otherwise
dispose of the shares of Southwest Common Stock held by such Person except
as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of FNB Common Stock
to be received by such Person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder and until such time as financial results
covering at least 30 days of combined operations of FNB and Southwest have
been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. Shares of FNB Common Stock
issued to such affiliates of Southwest in exchange for shares of
Southwest Common Stock shall not be transferable until such time as
financial results covering at least 30 days of combined operations of FNB
and Southwest have been published within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies, regardless of
whether each such affiliate has provided the written agreement referred to
in this Section 8.12 (and FNB shall be entitled to place restrictive
legends upon certificates for shares of FNB Common Stock issued to
affiliates of Southwest pursuant to this Agreement to enforce the
provisions of this Section 8.12). FNB shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for
the purposes of resale of FNB Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
FNB shall provide generally to officers and employees of the Southwest
Companies employee benefits under employee benefit plans (other than stock
option or other plans involving the potential issuance of FNB Common
Stock), on terms and conditions which when taken as a whole are no less
favorable than those currently provided by Southwest or those currently
provided by the FNB Companies to their similarly situated officers and
employees; provided, that, for a period of 12 months after the Effective
Time, FNB shall provide generally to
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officers and employees of Southwest Companies severance benefits in
accordance with the policies of Southwest as disclosed in Section 8.13 of
the Southwest Disclosure Memorandum. For purposes of participation and vesting
(but not benefit accrual under any employee benefit plans of FNB and its
subsidiaries other than the Southwest Benefit Plans) under such employee
benefit plans, the service of the employees of the Southwest Companies prior to
the Effective Time shall be treated as service with a FNB Company
participating in such employee benefit plans. FNB shall, and shall cause its
Subsidiaries to, honor in accordance with their terms all employment,
severance, consulting, and other compensation Contracts disclosed in
Section 8.13 of the Southwest Disclosure Memorandum between any Southwest
Company and any current or former director, officer, or employee thereof, and
all provisions for vested benefits or other vested amounts earned or accrued
through the Effective Time under the Southwest Benefit Plans; provided,
however, that all such Contracts shall have been amended prior to the signing
of this Agreement to provide that the Merger and the other transactions
contemplated by the Agreement shall not constitute a "change of control" or
otherwise give rise to any rights of acceleration, payment or other special
rights under any such Contracts.
8.14 INDEMNIFICATION.
(a) FNB shall indemnify, defend, and hold harmless the present and
former directors, officers, employees, and agents of the Southwest
Companies (each, an "Indemnified Party") against all Liabilities arising
out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement) to the full
extent permitted under Florida Law and by Southwest's Articles of
Incorporation and Bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
Litigation. Without limiting the foregoing, in any case in which approval
by FNB is required to effectuate any indemnification, FNB shall direct, at
the election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon
between FNB and the Indemnified Party.
(b) If FNB or any of its successors or assigns shall consolidate with
or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all or
substantially all of its assets to any Person, then and in each case,
proper provision shall be made so that the successors and assigns of FNB
shall assume the obligations set forth in this Section 8.14.
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(c) The provisions of this Section 8.14 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6 of this Agreement:
(A) SHAREHOLDER APPROVAL. The shareholders of Southwest shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law.
(B) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to
the raising of additional capital or the disposition of Assets) which in
the reasonable judgment of the Board of Directors of either Party would so
materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement that, had such
condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 9.1(b) of this Agreement or listed in Section 9.1(c) of the
Southwest Disclosure Memorandum) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on such Party.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes
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illegal consummation of the transactions contemplated by this Agreement.
(E) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of FNB Common Stock issuable
pursuant to the Merger shall have been received.
(F) POOLING OF INTERESTS. Ernst & Young LLP, FNB's independent public
accountants, shall have issued a letter dated as of the Effective Time, to
Southwest and FNB, respectively, to the effect that the Merger shall be
accounted for as a pooling-of-interests under GAAP.
(G) TAX MATTERS. Each Party shall have received a written opinion or
opinions from counsel and in a form reasonably satisfactory to such Parties
(the "Tax Opinion"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code and (ii) the exchange in the Merger of Southwest Common Stock for FNB
Common Stock will not give rise to gain or loss to the shareholders of
Southwest with respect to such exchange (except to the extent of any cash
received). In rendering such Tax Opinion, such counsel shall be entitled
to rely upon representations of officers of Southwest and FNB reasonably
satisfactory in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF FNB. The obligations of FNB to
perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by FNB pursuant to Section 11.6(a) of
this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties
of Southwest set forth in this Agreement shall be assessed as of the
date of this Agreement and as of the Effective Time with the same
effect as though all such representations and warranties had been
made on and as of the Effective Time (provided that representations
and warranties which are confined to a specified date shall speak
only as of such date). The representations and warranties of
Southwest set forth in Section 5.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimus in
amount).
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The representations and warranties of Southwest set forth in
Sections 5.17, 5.18, 5.19, and 5.20 of this Agreement shall be true
and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Southwest set
forth in this Agreement (including the representations and
warranties set forth in Sections 5.3, 5.17, 5.18, 5.19, and 5.20)
such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Southwest;
provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
Immaterial" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Southwest to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(C) CERTIFICATES. Southwest shall have delivered to FNB (i) a
certificate, dated as of the Effective Time and signed on its behalf
by its chief executive officer and its chief financial officer, to
the effect that the conditions of its obligations set forth in
Section 9.2(a) and 9.2(b) of this Agreement have been satisfied,
and (ii) certified copies of resolutions duly adopted by Southwest's
Board of Directors and shareholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery,
and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as
FNB and its counsel shall request.
(D) AFFILIATES AGREEMENTS. FNB shall have received from each
affiliate of Southwest the affiliates letter referred to in Section
8.12 of this Agreement, to the extent necessary to assure in the
reasonable judgment of FNB that the transactions contemplated hereby
will qualify for pooling-of-interests accounting treatment.
(E) CUMULATIVE EARNINGS. As of the close of the most recent
calendar quarter (or if the Effective Time shall occur within 20 days
following the close of a calendar quarter, then as of the next
preceding calendar quarter) cumulative earnings reported by
Southwest since December 31, 1995 shall be greater than or equal to
the amount calculated by multiplying (a) $500,000 by (b) the number
of full calendar quarters which have passed since
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December 31, 1995 and for which earnings have been reported as of
such date. As used in this Section "reported" means reported on
Southwest's financial statements prepared in accordance with GAAP
applied on a basis consistent with Southwest's financial statements
for the years ended December 31, 1995 and 1994, as included in
Southwest's reports to the Securities and Exchange Commission on Forms
10-K-SB or Southwest's annual reports to shareholders subject to any
subsequent adjustments required to be reported whether or not such
adjustments have, as yet, been reported with the following adjust-
ments, if any, net of related income tax savings and costs, which
were reflected in net income for the relevant period(s) added back
into or deducted from net income for the applicable period: (i)
investment banking expenses, outside legal and accounting fees, or
other costs (including severance and extraordinary restructuring
costs) and expenses associated with or resulting from the Merger,
(ii) gains or losses on sales of assets outside of the ordinary course
of business, (iii) any expense related to the exercise of options or
the lapses of restrictions on restricted stock; and (iv) any other
expenses which are incurred in connection with the transactions
contemplated by this Agreement upon which FNB and Southwest shall
mutually agree.
9.3 CONDITIONS TO OBLIGATIONS OF SOUTHWEST. The obligations of
Southwest to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of
the following conditions, unless waived by Southwest pursuant to Section
11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties
of FNB set forth in this Agreement shall be assessed as of the date
of this Agreement and as of the Effective Time with the same effect
as though all such representations and warranties had been made on
and as of the Effective Time (provided that representations and
warranties which are confined to a specified date shall speak only
as of such date). The representations and warranties of FNB set
forth in Section 6.3 of this Agreement shall be true and correct
(except for inaccuracies which are de minimus in amount). The
representations and warranties of FNB set forth in Section 6.11 of
this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and
warranties of FNB set forth in this Agreement (including the
representations and warranties
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set forth in Sections 6.3 and 6.11 such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on FNB; provided that, for purposes of this sentence only,
those representations and warranties which are qualified by references
to "material" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of FNB to be performed and complied with
pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed
and complied with in all material respects.
(C) CERTIFICATES. FNB shall have delivered to Southwest (i) a
certificate, dated as of the Effective Time and signed on its behalf
by its chief executive officer and its chief financial officer, to
the effect that the conditions of its obligations set forth in
Section 9.3(a) and 9.3(b) of this Agreement have been satisfied,
and (ii) certified copies of resolutions duly adopted by FNB's Board
of Directors evidencing the taking of all corporate action necessary
to authorize the execution, delivery, and performance of this
Agreement, and the consummation of the transactions contemplated
hereby, all in such reasonable detail as Southwest and its counsel
shall request.
(D) FAIRNESS OPINION. Southwest shall have received from The
Robinson-Humphrey Company, Inc. a letter, dated not more than five
business days prior to the date of the Proxy Statement, to the effect
that, in the opinion of such firm, the Exchange Ratio is fair, from a
financial point of view, to the holders of Southwest Common Stock.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Southwest, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of FNB and the
Board of Directors of Southwest; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach
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of any representation or warranty contained in this Agreement under the
applicable standard set forth in Section 9.2(a) of this Agreement in the
case of Southwest and Section 9.3(a) in the case of FNB or in material
breach of any covenant or other agreement contained in this
Agreement) in the event of an inaccuracy of any representation or
warranty of the other Party contained in this Agreement which cannot
be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such inaccuracy and which inaccuracy
would provide the terminating Party the ability to refuse to
consummate the Merger under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Southwest and
Section 9.3(a) of this Agreement in the case of FNB; or
(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured
within 30 days after the giving of written notice to the breaching
Party of such breach; or
(d) By the Board of Directors of either Party in the event (i)
any Consent of any Regulatory Authority required for consummation of
the Merger and the other transactions contemplated hereby shall have
been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit
for appeal, or (ii) the shareholders of Southwest fail to vote
their approval of this Agreement and the transactions contemplated
hereby as required by the FBCA at the Shareholders' Meeting where the
transactions were presented to such shareholders for approval and
voted upon; or
(e) By the Board of Directors of either Party in the event that
the Merger shall not have been consummated by July 31, 1997, if the
failure to consummate the transactions contemplated hereby on or
before such date is not caused by any breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard
set forth in Section 9.2(a) of this Agreement in the case of
Southwest and Section 9.3(a) in the case of FNB or in
material breach of any covenant or other agreement contained in this
Agreement) in the event that any of the conditions precedent to
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the obligations of such Party to consummate the Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(e) of
this Agreement; or
(g) By Southwest, if its Board of Directors determines by a
vote of a majority of the members of its entire Board of Directors,
at any time during the ten-day period commencing two days after the
Determination Date, if the Designated Price on the Determination
Date of shares of FNB Common Stock shall be less than $19.00;
subject, however, to the following four sentences. If Southwest
refuses to consummate the Merger pursuant to this Section 10.1(g), it
shall give prompt written notice thereof to FNB; provided, that
such notice of election to terminate may be withdrawn at any time
within the aforementioned ten-day period. During the five-day
period commencing with its receipt of such notice, FNB shall have
the option, subject to Southwest's written agreement, to elect to
increase the Exchange Ratio to equal the quotient obtained by
dividing (1) the product of $19.00 and the Exchange Ratio (as then
in effect) by (2) the Designated Price. If FNB makes an election
contemplated by the preceding sentence, within such five-day
period, it shall give prompt written notice to Southwest of such
election and the revised Exchange Ratio, whereupon, provided that
Southwest agrees to permit such an election by executing a written
acceptance thereof, no termination shall occur pursuant to this
Section 10.1(g) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall
have been so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 10.1(g).
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement,
this Agreement shall become void and have no effect, except that (i) the
provisions of this Section 10.2 and Article 11 and Section 8.6(b) of this
Agreement shall survive any such termination and abandonment, and (ii) a
termination pursuant to Sections 10.1(b), 10.1(c), or 10.1(f) of this
Agreement shall not relieve the breaching Party from Liability for an
uncured willful breach of a representation, warranty, covenant, or
agreement giving rise to such termination; provided, further, that in the
event of any termination of this Agreement following the occurrence of an
Initial Triggering Event (as defined in the Stock Option Agreement), FNB
shall be entitled to a cash payment from Southwest in an amount equal to $1
million upon the occurrence of any Subsequent Triggering Event (as defined
in the Stock Option Agreement) within
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twelve months following the date of such termination (or such longer
period as shall exist under the Stock Option Agreement until the occurrence of
an Exercise Termination Date (as defined in the Stock Option Agreement)). In
the event this Agreement is terminated as a result of FNB's failure to satisfy
any of its representations, warranties or covenants set forth herein, FNB
shall reimburse Southwest for its reasonable out-of-pocket expenses relating
to the Merger in an amount not to exceed $250,000.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations and warranties of the Parties shall not survive the
Effective Time. All agreements of the Parties to this Agreement which by their
terms are to be performed following the Effective Time shall survive the Effec-
tive Time until performed in accordance with their terms.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the assets of, such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person;
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person; or (iii) any other Person for which a Person described
in clause (ii) acts in any such capacity.
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"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature,
character, and description, whether real, personal, or mixed,
tangible or intangible, accrued or contingent, or otherwise relating
to or utilized in such Person's business, directly or indirectly, in
whole or in part, whether or not carried on the books and records of
such Person, and whether or not owned in the name of such Person or
any Affiliate of such Person and wherever located.
"BHC ACT" shall mean the Federal Bank Holding Company Act of
1956, as amended.
"CONFIDENTIALITY AGREEMENTS" shall mean those certain
Confidentiality Agreements, between Southwest and FNB entered into
in connection with the discussions relating to the Merger.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets, or business.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any
event that with the passage of time or the giving of notice or both
would constitute a breach or violation of or default under any
Contract, Order, or Permit, or (iii) any occurrence of any event that
with or without the passage of time or the giving of notice would
give rise to a right to terminate or revoke, change the current terms
of, or renegotiate, or to accelerate, increase, or impose any
Liability under, any Contract, Order, or Permit, where, in any such
event, such Default is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on a Party.
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"DERIVATIVES CONTRACT" shall have the meaning set forth in
Section 5.20 hereof.
"DESIGNATED PRICE" shall mean the average of the mid-point of
the closing high bid and low asked prices of FNB Common Stock in
the over-the-counter market, as reported by Nasdaq or such other
trading system or exchange upon which the FNB Common Stock shall then
be traded for the twenty consecutive full trading days in which such
shares are traded ending at the close of trading on the
Determination Date.
"DETERMINATION DATE" shall mean the day prior to the date on
which the Consent of the Board of Governors of the Federal Reserve
System is received.
"EFFECTIVE TIME" shall have the meaning set forth in Section 1.3
hereof.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata)
and which are administered, interpreted, or enforced by the United
States Environmental Protection Agency and state and local agencies
with jurisdiction over, and including common law in respect of,
pollution or protection of the environment, including the
Comprehensive Environmental Response Compensation and Liability Act,
as amended, 42 U.S.C. 9601 et seq., the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq., and other Laws
relating to emissions, discharges, releases, or threatened releases
of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" shall have the meaning set forth in Section
5.12(c) hereof.
"EXCHANGE AGENT" shall have the meaning set forth in Section 4.1
hereof.
"EXCHANGE RATIO" shall have the meaning set forth in Section
3.1(c) hereof.
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"EXHIBITS" 1 and 2 shall mean the Exhibits so marked, copies of
which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto.
"FNB" shall have the meaning set forth in the first paragraph
hereof.
"FNB CAPITAL STOCK" shall mean, collectively, the FNB Common
Stock, the FNB Preferred Stock, and any other class or series of
capital stock of FNB.
"FNB COMMON STOCK" shall mean the $2 par value common stock of
FNB.
"FNB COMPANIES" shall mean, collectively, FNB and all FNB
Subsidiaries.
"FNB DISCLOSURE MEMORANDUM" shall mean the written information
entitled "FNB Corporation Disclosure Memorandum" delivered prior to
the date of this Agreement to Southwest describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made.
"FNB FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if
any) of FNB as of September 30, 1995, and as of December 31, 1994 and
1993, and the related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if
any) for the six months ended September 30, 1995, and for each of the
three years ended December 31, 1994, 1993, and 1992, as filed by FNB
in SEC Documents, and (ii) the consolidated statements of condition
of FNB (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in
SEC Documents filed with respect to periods ended subsequent to
September 30, 1995.
"FNB PREFERRED STOCK" shall mean the $10 par value preferred
stock of FNB.
"FNB SEC REPORTS" shall have the meaning set forth in Section
6.4(a) hereof.
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"FNB SUBSIDIARIES" shall mean the Subsidiaries of FNB, which
shall include any corporation, bank, savings association, or other
organization acquired as a Subsidiary of FNB in the future and
owned by FNB at the Effective Time.
"FBCA" shall mean the Florida Business Corporation Act.
"FLORIDA CERTIFICATE OF MERGER" shall mean the Certificate of
Merger to be executed by FNB and filed with the Secretary of State of
the State of Florida relating to the Merger as contemplated by
Section 1.1 of this Agreement.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any poly-chlorinated
biphenyls).
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
8.14 hereof.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by
Title II of the Hart-Scott-Rodino Anti-trust Improvements Act of
1976, as amended, and the rules and regulations promulgated
thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean the personal knowledge of the chairman, president, chief
financial officer, chief accounting officer, chief credit officer,
general counsel, any assistant or deputy general counsel, or any
senior or executive vice president of such Person and the knowledge
of any such persons obtained or which would have been obtained from
a reasonable investigation.
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"LAW" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities, or business, including those
promulgated, interpreted, or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, deficiency, guaranty, or endorsement of or by any Person
(other than endorsements of notes, bills, checks, and drafts
presented for collection or deposit in the ordinary course of business)
of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention, or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable, and (ii) for depository institution Subsidiaries of a
Party, pledges to secure deposits, and other Liens incurred in the
ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing,
inquiry, administrative or other proceeding, or notice (written or
oral) by any Person alleging potential Liability or requesting
information relating to or affecting a Party, its business, its
Assets (including Contracts related to it), or the transactions
contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates
by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security or other interest
(including an interest in a fiduciary capacity), and, where required
by the context, includes the owner or operator of such property, but
only with respect to such property.
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"MATERIAL" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
change, or occurrence which, individually or together with any other
event, change, or occurrence, has a material adverse impact on (i)
the financial position, business, or results of operations of such
Party and its Subsidiaries, taken as a whole, or (ii) the ability of
such Party to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be
deemed to include the impact of (a) changes in banking and similar
Laws of general applicability or interpretations thereof by courts
or governmental authorities, (b) changes in GAAP or regulatory
accounting principles generally applicable to banks and their holding
companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other
Party in contemplation of the transactions contemplated hereby, (d)
circumstances affecting regional bank holding companies generally, and
(e) the Merger and compliance with the provisions of this Agreement on
the operating performance of the Parties.
"MERGER" shall have the meaning set forth in Section 1.1
hereof.
"MERGER SUB" shall have the meaning set forth in the first
paragraph hereof.
"NASDAQ" shall mean the Nasdaq Stock Market.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NYSE" shall mean the New York Stock Exchange, Inc.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasijudicial decision or award,
ruling, or writ of any federal, state, local, or foreign or other
court, arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority.
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"PARTICIPATION FACILITY" shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates
in the management and, where required by the context, said term means
the owner or operator of such facility or property, but only with
respect to such facility or property.
"PARTY" shall mean either Southwest or FNB, and "Parties" shall
mean both Southwest and FNB.
"PBCL" shall mean the Pennsylvania Business Corporation Law.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right to which any
Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial,
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by
Southwest to solicit the approval of its shareholders of the
transactions contemplated by this Agreement, which shall include the
prospectus of FNB relating to the issuance of the FNB Common Stock
to holders of Southwest Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective
or post-effective amendments or supplements thereto, filed with the
SEC by FNB under the 1933 Act with respect to the shares of FNB
Common Stock to be issued to the shareholders of Southwest in
connection with the transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board
of the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, all state regulatory agencies having jurisdiction over
the
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Parties and their respective Subsidiaries, the NASD, and the
SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant or other representative of
a Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of a Person or by which
a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" shall mean the Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its Subsidiaries
with any Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority
promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of Southwest to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.
"SOUTHWEST" shall have the meaning set forth in the first
paragraph hereof.
"SOUTHWEST BENEFITS PLANS" shall have the meaning set forth in
Section 5.12(a) hereof.
"SOUTHWEST COMMON STOCK" shall mean the $0.10 par value common
stock of Southwest.
"SOUTHWEST COMPANIES" shall mean, collectively, Southwest and
all Southwest Subsidiaries.
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"SOUTHWEST CONTRACT" shall have the meaning set forth in Section
5.13.
"SOUTHWEST DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Southwest Corporation Disclosure Memorandum"
delivered prior to the date of this Agreement to FNB describing in
reasonable detail the matters contained therein and, with respect
to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section shall not be
deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"SOUTHWEST ERISA PLAN" shall have the meaning set forth in
Section 5.12(a) hereof.
"SOUTHWEST FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Southwest as of September 30, 1995, and as of December 31, 1994 and
1993, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) for the six months ended September 30, 1995, and
for each of the three fiscal years ended December 31, 1994, 1993, and
1992, as filed by Southwest in SEC Documents, and (ii) the
consolidated balance sheets of Southwest (including related notes
and schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to September 30, 1995.
"SOUTHWEST PENSION PLAN" shall have the meaning set forth in
Section 5.12(a) hereof.
"SOUTHWEST STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans and warrant instruments of
Southwest set forth in Section 3.5 of the Southwest Disclosure
Memorandum.
"SOUTHWEST OPTIONS" shall have the meaning set forth in Section
3.5(a) hereof.
"SOUTHWEST SEC REPORTS" shall have the meaning set forth in
Section 5.5(a) hereof.
"SOUTHWEST SUBSIDIARIES" shall mean the Subsidiaries of
Southwest, which shall include the Southwest
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Subsidiaries described in Section 5.4 of this Agreement and any
corporation, bank, savings association, or other organization acquired
as a Subsidiary of Southwest in the future and owned by Southwest at
the Effective Time.
"STOCK OPTION AGREEMENT" shall have the meaning set forth in the
Preamble hereof.
"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns
or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly
or indirectly by its parent; provided, there shall not be included
any such entity acquired through foreclosure or any such entity the
equity securities of which are owned or controlled in a fiduciary
capacity.
"SURVIVING CORPORATION" shall mean Southwest as the surviving
corporation resulting from the Merger.
"TAKEOVER LAWS" shall have the meaning set forth in Section 5.18
hereof.
"TAX" OR "TAXES" shall mean all federal, state, local, and
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on
minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States
or any state, local, foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto.
"TAX OPINION" shall have the meaning set forth in Section 9.1(g)
hereof.
"TAXABLE PERIOD" shall mean any period prescribed by any
governmental authority, including the United States or any state, local,
foreign government or subdivision or agency thereof for which a Tax
Return is required to be filed or Tax is required to be paid.
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<PAGE> 63
"TAX RETURN" shall mean any report, return, information return,
or other information required to be supplied to a taxing authority
in connection with Taxes, including any return of an affiliated or
combined or unitary group that includes a Party or its Subsidiaries.
(b) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of FNB
and Southwest shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of FNB and Southwest shall bear and
pay one-half of the printing costs incurred in connection with the printing of
the Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for The Robinson-Humphrey Company,
Inc. as to Southwest and except for McConnell, Budd & Downes, Inc. as to
FNB, each of the Parties represents and warrants that neither it nor any
of its officers, directors, employees, or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the transactions contemplated hereby.
In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being
retained by Southwest or FNB, each of Southwest and FNB, as the case may
be, agrees to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
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11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except for the
Confidentiality Agreements). Nothing in this Agreement expressed or implied,
is intended to confer upon any Person, other than the Parties or their
respective successors, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, other than as provided in Sections 8.14 of
this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before
or after shareholder approval of this Agreement has been obtained;
provided, that after any such approval by the holders of Southwest Common
Stock, there shall be made no amendment that reduces or modifies in any
material respect the consideration to be received by holders of Southwest
Common Stock without the further approval of such shareholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, FNB, acting through its Board
of Directors, chief executive officer, president or other authorized
officer, shall have the right to waive any Default in the performance of
any term of this Agreement by Southwest, to waive or extend the time for
the compliance or fulfillment by Southwest of any and all of its
obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of FNB under this Agreement,
except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of FNB.
(b) Prior to or at the Effective Time, Southwest, acting through its
Board of Directors, chief executive officer, president or other authorized
officer, shall have the right to waive any Default in the performance of
any term of this Agreement by FNB, to waive or extend the time for the
compliance or fulfillment by FNB of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Southwest under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such
waiver shall be effective
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<PAGE> 65
unless in writing signed by a duly authorized officer of Southwest.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or
breach or a waiver of any other condition or of the breach of any other
term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests, or obligations hereunder
shall be assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by the Parties and their respective
successors and assigns.
11.8 NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by
hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the
addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
Southwest: 900 Goodlette Road
North Naples, Florida 33940
Telecopy Number: 813-435-7658
Attention: Chairman and Chief
Executive Officer
Copy to Counsel: Smith, Gambrell & Russell
3343 Peachtree Road, NE
Suite 1800
Atlanta, Georgia 30326
Telecopy Number: 404-264-2658
Attention: Robert Schwartz
FNB: Hermitage Square
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<PAGE> 66
Hermitage, PA 16148
Telecopy Number: 412-983-3515
Attention: Chairman and Chief
Executive Officer
Copy to Counsel: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy Number: (212) 403-2000
Attention: Craig M. Wasserman
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the Commonwealth of Pennsylvania,
without regard to any applicable conflicts of Laws, except to the extent
that the Laws of the State of Florida relate to the consummation of the
Merger.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No Party to this Agreement
shall be considered the draftsman. The parties acknowledge and agree that
this Agreement has been reviewed, negotiated, and accepted by all Parties
and their attorneys and shall be construed and interpreted according to
the ordinary meaning of the words used so as fairly to accomplish the
purposes and intentions of all parties hereto.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specific terms or
was otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or
in equity.
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11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
--------------------------
Name: Peter Mortensen
Title: Chairman of the Board
and President
SOUTHWEST BANKS, INC.
By: /s/ Gary L. Tice
--------------------------
Name: Gary L. Tice
Title: Chairman of the Board,
President, and Chief
Executive Officer
LAMBDA CORPORATION
By: /s/ Peter Mortensen
--------------------------
Name: Peter Mortensen
Title: President
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<PAGE> 68
EXHIBIT 2
FORM OF AFFILIATE LETTER ADDRESSED TO FNB
FNB Corporation
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to
be an "affiliate" of Southwest Banks, Inc., a Florida corporation
("Southwest"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 ("Rule 145") of the Rules and
Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Act"), and/or (ii) used in and for purposes of
Accounting Series, Releases 130 and 135, as amended, of the Commis
sion. I have been further advised that pursuant to the terms of the
Agreement and Plan of Merger dated as of February 2, 1996 (the "Merger
Agreement"), by and between F.N.B. Corporation, a Pennsylvania
corporation ("FNB"), Lambda Corporation, a Florida corporation and
whollyowned subsidiary of FNB ("Lambda") and Southwest, Lambda will be
merged with and into Southwest in a reverse triangular merger (the
"Merger"), and that as a result of the Merger, I may receive shares of
FNB Common Stock (as defined in the Merger Agreement), in exchange for
shares of Southwest Common Stock (as defined in the Merger Agreement)
owned by me.
I represent, warrant and covenant to FNB that in the event I
receive any FNB Common Stock as a result of the Merger:
1. I shall not make any sale, transfer or other disposition
of the FNB Common Stock in violation of the Act or the Rules and
Regulations.
2. I have carefully read this letter and the Agreement and
discussed its requirements and other applicable limitations upon
my ability to sell, transfer or otherwise dispose of FNB Common
Stock to the extent I believed necessary, with my counsel or
counsel for Southwest.
3. I have been advised that the issuance of FNB Common Stock
to me pursuant to the Merger has been registered with the
Commission under the Act on a Registration Statement on Form
S-4. However, I have also
<PAGE> 69
been advised that, since at the time the Merger was submitted for a
vote of the stockholders of FNB, I may be deemed to have been an
affiliate of Southwest and the distri bution by me of the FNB Common
Stock has not been registered under the Act, and that I may not sell,
transfer or otherwise dispose of FNB Common Stock issued to me in the
Merger unless (i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or other disposition
is made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to FNB, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
4. I understand that FNB is under no obligation to register
the sale, transfer or other disposition of the FNB Common Stock
by me or on my behalf under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
5. I also understand that stop transfer instructions will
be given to FNB's transfer agents with respect to the FNB Common
Stock and that there will be placed on the certificates for the
FNB Common Stock issued to me, or any substitutions therefor, a
legend stating in substance:
The securities represented by this
certificate have been issued in a transaction
to which Rule 145 promulgated under the
Securities Act of 1933 applies and may only be
sold or otherwise transferred in compliance
with the requirements of Rule 145 or pursuant
to a registration statement under said act or
an exemption from such registration.
6. I also understand that unless the transfer by me of my
FNB Common Stock has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, FNB reserves
the right to put the following legend on the certificates issued
to my transferee:
The shares represented by this
certificate have not been registered under
the Securities Act of 1933 and were acquired
from a person who received such shares in a
transaction to
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<PAGE> 70
which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares have been acquired
by the holder not with a view to, or for re sale in
connection with, any distribution thereof within the
meaning of Securities Act of 1933 and may not be
sold, pledged or otherwise transferred except in
accordance with an exemption from the registration
requirements of the Securities Act of 1933.
It is understood and agreed that the legends set forth in paragraphs 5
and 6 above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to FNB a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and
substance reasonably satisfactory to FNB, to the effect that such legend is not
required for purposes of the Act.
I further represent to and covenant with FNB that from the date that is
30 days prior to the Effective Time (as defined in the Merger Agreement) I will
not sell, transfer or otherwise dispose of shares of Southwest Common Stock
held by me and that I will not sell, transfer or otherwise dispose of any
shares of FNB Common Stock received by me in the Merger or other shares of FNB
Capital Stock (as defined in the Merger Agreement) until after such time as
results covering at least 30 days of combined operations of FNB and Southwest
have been published by FNB, in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10K, 10Q, or 8K, or any other public filing or announcement
which includes the results of at least 30 days of combined operations;
provided, however, that this paragraph shall not prevent me from selling,
transferring or disposing of such number of shares of Southwest Common Stock or
FNB Capital Stock as will not, in the reasonable judgment of accountants to
FNB, interfere with or prevent the Merger being accounted for as a "pooling of
interests", taking into account the nature, extent and timing of such sale,
transfer or disposition and of similar sales, transfers or dispositions by all
other affiliates of Southwest and all affiliates of FNB.
I understand that pursuant to the Merger Agreement, no certificate
for FNB Common Stock shall be delivered to me in exchange for certificates
representing Southwest Common Stock until I have executed and delivered this
agreement.
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<PAGE> 71
Very truly yours,
By:
----------------------------
Name:
Accepted this______day of
, 1996, by
F.N.B. Corporation
By
- ----------------------------
Name:
Title:
B-4
<PAGE> 1
EXHIBIT NUMBER 4.1
<PAGE> 2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated February 2, 1996, between F.N.B.
Corporation, a Pennsylvania corporation ("Grantee"), and Southwest Banks, Inc.,
a Florida corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), which agreement
has been executed by the parties hereto prior to this Agreement; and
WHEREAS, as a condition and inducement to Grantee's pursuit of
the transactions contemplated by the Merger Agreement and in consideration
therefor, Issuer has agreed to grant Grantee the Option (as hereinafter
defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 727,163 fully paid and nonassessable shares of the common stock, $0.10 par
value, of Issuer ("Common Stock"), at a price per share equal to $15 (as
adjusted as set forth herein, the "Option Price"); provided, that in no event
shall the number of shares for which this Option is exercisable exceed 19.9% of
the issued and outstanding shares of Common Stock. The number of shares of
Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance, it
equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section l(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise
the Option, notwithstanding the provisions of the Confidentiality Agreements
(as defined in the Merger Agreement) in
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<PAGE> 3
whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time (as defined in the Merger Agreement)
of the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event; or (iii) the passage of 12 months (or such longer
period as provided in Section 10) after termination of the Merger Agreement if
such termination follows the occurrence of an Initial Triggering Event. The
term "Holder" shall mean the holder or holders of the Option. The rights set
forth in Sections 7 and 9 shall terminate when the right to exercise the Option
terminates (other than as a result of a complete exercise of the Option) as set
forth herein.
(b) The term "Initial Triggering Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (as hereinafter
defined) (each an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of this Agreement having
the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934 (the "1934 Act"), and the rules and
regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer
shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction other than as contemplated by the
Merger Agreement or this Agreement. For purposes of this Agreement,
(a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
Issuer, (y) a purchase, lease or other acquisition of all or
substantially all of the assets or deposits of Issuer or any
Significant Subsidiary of Issuer, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 15% or more of the voting
power of Issuer or any Significant Subsidiary of Issuer, and (b)
"Subsidiary" shall have the meaning set forth in Rule 12b-2 under the
1934 Act;
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<PAGE> 4
(ii) Any person other than Grantee, any Grantee Subsidiary
or any Issuer Subsidiary acting in a fiduciary capacity shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of 15% or more of the outstanding shares of Common Stock
(the term "beneficial ownership" for purposes of this Agreement having
the meaning assigned thereto in Section 13(d) of the 1934 Act, and the
rules and regulations thereunder);
(iii) The shareholders of the Issuer shall not have
approved the transactions contemplated by the Merger Agreement at the
meeting held for that purpose or any adjustment thereof, or such
meeting shall not have been held or shall have been canceled prior to
termination of the Merger Agreement, in either case, after Issuer's
Board of Directors shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify or interest in
withdrawing or modifying) its recommendation that the shareholders of
Issuer approve the transactions contemplated by the Merger Agreement,
or Issuer or any Issuer Subsidiary, without having received Grantee's
prior written consent, shall have authorized, recommended, proposed
(or publicly announced its intention to authorize, recommend or
propose or interest in authorizing, recommending or proposing) an
agreement to engage in an Acquisition Transaction, with any person
other than Grantee or a Grantee Subsidiary;
(iv) Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to Issuer or its
shareholders to engage in an Acquisition Transaction;
(v) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of
engaging in an Acquisition Transaction, and such breach would entitle
Grantee to terminate the Merger Agreement; or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board or other federal
or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction.
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<PAGE> 5
(c) The term "Subsequent Triggering Event" shall mean any
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership
of 25% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in clause (i) of subsection (b) of this Section 2, except
that the percentage referred to in clause (z) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice prior to an
Exercise Termination Event (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise and (ii) a place and date not earlier than three
business days nor later than 10 business days from the Notice Date for the
closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other
regulatory agency is required in connection with such purchase, the Holder
shall promptly file the required notice or application for approval, shall
promptly notify the Issuer of such filing, and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained and any
requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer, provided that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
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<PAGE> 6
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable thereunder.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (1) the reference to the resale restrictions
of the Securities Act of 1933 (the "1933 Act") in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
Holder shall have delivered to Issuer a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance satisfactory to Issuer, to
the effect that such legend is not required for purposes of the 1933 Act; (ii)
the reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the proceeding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under subsection (e) of
this Section 2 and the tender of the applicable purchase price in immediately
available funds the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that
A-5
<PAGE> 7
certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of
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<PAGE> 8
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date.
5. The number of shares of Common Stock purchasable upon the exercise
of the Option shall be subject to adjustment from time to time as provided in
this Section 5.
(a) In the event of any change in Common Stock by reason of
stock dividends, splitups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type
and number of shares of Common Stock purchasable upon exercise hereof
shall be appropriately adjusted and proper provision shall be made so
that, in the event that any additional shares of Common Stock are to
be issued or otherwise become outstanding as a result of any such
change (other than pursuant to an exercise of the Option), the number
of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of
Common Stock previously issued pursuant to the exercise of the Option
(as adjusted on account of any of the foregoing changes in the Common
Stock), it equals 19.9% of the number of shares of Common Stock then
issued and outstanding.
(b) Whenever the number of shares of Common Stock
purchasable upon exercise hereof is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the
Option Price by a fraction, the numerator of which shall be equal to
the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number
of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10) (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its best efforts to cause such
registration statement to become effective and remain current in order to
permit the sale or other disposition of any shares of Common Stock issued upon
total or partial exercise of this Option ("Option Shares") in accordance with
any plan of disposition
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requested by Grantee. Issuer will use its best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 120 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The Issuer shall bear the costs of
such registrations (including, but not limited to, attorneys' fees, printing
costs and filing fees). The foregoing notwithstanding, if, at the time of any
request by Grantee for registration of Option Shares as provided above, Issuer
is in registration with respect to an underwritten public offering of shares of
Common Stock, and if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering the inclusion of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the
number of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practical thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur
and the Holder shall thereafter be entitled to one additional registration.
Each such Holder shall provide all information reasonably requested by Issuer
for inclusion in any registration statement to be filed hereunder. If
requested by any such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements for Issuer. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
7. (a) Upon the occurrence of a Repurchase Event (as
hereinafter defined) that occurs prior to an Exercise Termination Event, (i) at
the request of the Holder, delivered prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as
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defined below) exceeds (B) the Option Price, multiplied by the number of shares
for which this Option may then be exercised and (ii) at the request of the
owner of Option Shares from time to time (the "Owner"), delivered prior to the
occurrence of an Exercise Termination Event (or such later period as provided
in Section 10), Issuer shall repurchase such number of the Option Shares from
the Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to the market/offer price multiplied by the number of Option
Shares so designated. The term "Repurchase Event" shall occur if (i) any
person (the term "person" for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the 1934 Act, and the
rules and regulations thereunder) other than Grantee or any of its Subsidiaries
shall have acquired beneficial ownership, or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the 1934 Act) shall
have been formed which beneficially owns or has the right to acquire beneficial
ownership of 50% or more of the then-outstanding shares of Common Stock (the
term "beneficial ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder), or (ii) any of the transactions described in Section
8(a)(i), 8(a)(ii), or 8(a)(iii) shall be consummated. The term "Market/Offer
Price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the three-month period immediately preceding the date the Holder gives notice
of the required repurchase of this Option or the Owner gives notice of the
required repurchase of Option Shares, as the case may be, or (iv) in the event
of a sale of all or substantially all of Issuer's assets or deposits, the sum
of the net price paid in such sale for such assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the market/offer price,
the value of consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Holder or Owner, as the case
may be,
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and any Option
Shares pursuant to this Section 7 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement or certificates for Option
Shares, as
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applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within ten business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from
delivering, within ten business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivery to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), the
Holder or Owner may revoke its notice of repurchase of the Option or the Option
Shares whether in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering, and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the
denominator of which is the Option Repurchase Price, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from repurchasing.
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8. (a) In the event that, prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with or merge
into any person, other than Grantee or a Grantee Subsidiary, and shall not be
the continuing or surviving corporation of such consolidation or merger, (ii)
to permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its or any Significant Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets or deposits (or the assets or
deposits of a Significant Subsidiary of Issuer).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the market/offer price,
as defined in Section 7.
(iv) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of substitute Common
Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of
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common stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of
the Substitute Option in substantially the same form as this Agreement (after
giving effect for such purpose to the provisions of Section 9), which agreement
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then exercisable and
the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than 19.9% of
the shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option.
(f) Issuer shall not enter into any transaction described
in subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the issuer of the Substitute Option
(the "Substitute Option Issuer") shall repurchase the Substitute Option from
the Substitute Option Holder at a price (the "Substitute Option Repurchase
Price") equal to the amount by which (i) the Highest Closing Price (as
hereinafter defined) exceeds (ii) the exercise price of the Substitute Option,
multiplied by the number of shares of Substitute Common Stock for which the
Substitute Option may then be exercised, and at the request of the owner (the
"Substitute Share Owner") of shares of Substitute Common Stock (the "Substitute
Shares"), the Substitute Option Issuer shall repurchase the
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Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the three-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner
gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within ten business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the portion of the Substitute Share Repurchase Price, respectively, which it is
no longer prohibited from delivering, within ten business days after the date
on which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of
a notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable
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law or regulation, or as a consequence of administrative policy, from
delivering to the substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, in full (and the Substitute Option Issuer shall
use its best efforts to receive all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the Substitute
Option Holder or Substitute Share Owner may revoke its notice of repurchase of
the Substitute Option or the Substitute Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price
or the Substitute Share Repurchase Price that the Substitute Option Issuer is
not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
the Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Substitute Option Repurchase Price less the
portion thereof theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or (B) to the
Substitute Share Owner, a certificate for the Substitute Option Shares it is
then so prohibited from repurchasing.
10. The periods for exercise of certain rights under Sections 2, 6,
7, 9 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights (for so long as the Holder
is using commercially reasonable efforts to obtain such regulatory approvals),
and for the expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason or
such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to
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consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and dear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder following
such Subsequent Triggering Event; provided, however that until the date 30 days
following the date on which the Federal Reserve Board has approved applications
by Grantee to acquire the shares of Common Stock subject to the Option, Grantee
may not assign its rights under the Option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one party acquires
the right to purchase in excess of 2% of the voting shares of issuer, (iii) an
assignment to a single party (i.e., a broker or investment banker) for the
purpose of conducting a widely disbursed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation applying to the Federal Reserve
Board under the Bank Holding Company Act for approval to acquire the shares
issuable hereunder, but Grantee shall not be obligated to apply to state
banking authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and
that the obligations of the parties hereto
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<PAGE> 17
shall be enforceable by either party hereto through injunctive or other
equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 5
hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
18. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
19. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assignees. Nothing in this
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Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assignees,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
21. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties had caused this Agreement to
be executed on its behalf by their officers thereunto duly authorized, all as
the date first above written.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
-----------------------------
Name: Peter Mortensen
Title: Chairman of the Board
and President
SOUTHWEST BANKS, INC.
By: /s/ Gary L. Tice
----------------------------
Name: Gary L. Tice
Title: Chairman of the Board
President and Chief
Executive Officer
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